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Lonmin’s Marikana mine concentrator plant.
Shares in Lonmin (LON:LMI), the world’s third-largest platinum producer, dropped as much as 7.3% on Thursday as mining giant and commodity trader Glencore (LON:GLEN) completed the distribution of its 23.9% stake in the South African miner to shareholders.
The troubled platinum producer saw its stock hitting a low of 128.7 p in early trading, the biggest loss in three months, and was trading at $136.0, or 1,16% lower than the previous session at 2:15 pm London time.
Glencore came to own its stake in Lonmin through its $68bn acquisition of Xstrata in 2013, and chief executive Ivan Glasenberg had on several occasions described the venture as a “non-core” one.
In fact, the company is believed to have been opposed to Xstrata’s decision to buy the stake in two market transactions back in 2008.
(Source: Google Finance)
Plans to spin off the stake came to light a year ago, when Glencore announced it would slash spending on its mines in 2015 to between $6.5bn and $6.8bn — down from a previously expected $7.9bn.
As a result of the move, the Swiss-based firm’s shareholders have received Lonmin stock in proportion to their stakes in Glencore, an option that Glasenberg considered better than a straight market disposal.
Three years of falling platinum prices and a five-months strike last year have left Lonmin near an all-time low and valued at just $1.2 billion. That’s down from a peak of more than $12 billion in 2007 for the miner of the metal used in cars and jewellery.
According to market analysts, such as Investec, the distribution of Glencore’s shares completed today may create a group of sellers that want to dispose of their holding. It also could create an opportunity for a buyer, it added.
2 Comments
Confused
A story about nothing.
No share price movement outside of normal ranges at all. In fact, the price performed a relatively better compared to normal peer relationship over these days. Get your fact together and do proper research please.
Just_the_Facts
Whether Lonmin’s share price went up or down, I don’t care. But I did find the article very informative. Before reading it, I had no idea what the distribution of Glencore’s shares implications could be.
Perhaps before attacking writers you should take a reading comprehension crash-course.